While Wheeler said the commission has "broad authority," he didn't promise to take any action beyond gathering information. "To be clear, what we are doing right now is collecting information, not regulating," he said. According to Comcast, the FCC has actually had the Comcast-Netflix agreement for months, but it had not previously revealed that fact.

Further Reading

“Consumers pay their ISP and they pay content providers like Hulu, Netflix or Amazon… Consumers must get what they pay for. As the consumer’s representative we need to know what is going on," Wheeler said after an FCC meeting today. "I have therefore directed the Commission staff to obtain the information we need to understand precisely what is happening in order to understand whether consumers are being harmed… We have received the agreements between Comcast and Netflix and Verizon and Netflix. We are currently in the process of asking for others."

The FCC will try to obtain the text of deals involving ISPs and content providers "across the board," he said.

"There is no limitation just because I named those companies [Netflix, Comcast, and Verizon]," Wheeler said in response to a reporter's question. "If we're talking about video being a driving force, it would be silly not to include YouTube, wouldn't it?"

He did not say whether the deals would be opened to the public.

Direct network interconnections generally take place between ISPs and content delivery networks and other large network operators. Generally, only the biggest content providers, such as Google, Amazon, Facebook, Pandora, eBay, or Apple have direct connections to ISPs. Netflix is the largest single source of North American Internet traffic during peak viewing periods.

The FCC's new examination of the interconnection market is separate from the commission's network neutrality proceedings, which primarily focus on how data travels after it enters ISP networks, Wheeler said.

Consumers should know why they can’t access content they paid for

Further Reading

Netflix recently agreed to pay both Comcast and Verizon for direct connections to their networks in order to alleviate congestion that makes streaming video perform poorly. Netflix is still negotiating with AT&T, but it has asked the FCC to require ISPs to provide no-fee interconnection.

“We are looking under the hood. Consumers want transparency, they want answers, and so do I," Wheeler said. "The bottom line is that consumers need to understand what is occurring when the Internet service they’ve paid for does not adequately deliver the content they desire, especially content they’ve also paid for."

The congestion affecting Netflix performance on Comcast's network cleared up soon after the companies announced their agreement. However, Netflix performance is still poor on Verizon because the companies haven't established direct connections yet.

Verizon hopes the FCC won't regulate the peering market.

"Internet traffic exchange has always been handled through commercial agreements," Verizon said in a statement sent to Ars. "This has worked well for the Internet ecosystem and consumers. We are hopeful that policy makers will recognize this fact and that the Internet will continue to be the engine of growth of the global economy."

Today, Netflix said, "We welcome the FCC's efforts to bring more transparency in this area. Americans deserve to get the speed and quality of Internet access they pay for."

However, Comcast said today that it welcomes the FCC's review. In a statement, Comcast VP of Government Communications Sena Fitzmaurice said:

We welcome the Chairman’s attention to these important issues in the Internet ecosystem. Internet traffic exchange on the backbone is part of ensuring that bits flow freely and efficiently, and all actors across the system have a shared responsibility to preserve the smooth functioning and highly competitive backbone interconnection market. We welcome this review which will allow the Commission full transparency into the entire Internet backbone ecosystem and enable full education as to how this market works.

We have long published our peering policies, for example, and are open to discussions about further disclosures that would benefit consumers. We also have voluntarily shared a vast array of information about our peering and interconnection practices with the FCC. We also agree with the Chairman that the broadband consumer should be the focus of this inquiry and not any particular business model. We look forward to continuing to work with the FCC on these issues.

Consumer advocacy group Free Press urged the FCC "to protect Internet users from abuse and arm them with any information it finds in this investigation."

"By slowing down content from some of their video competitors, phone and cable companies have duped untold numbers of consumers into purchasing faster and pricier tiers of service," Free Press Policy Director Matt Wood said. "But selling users more expensive services won't fix a problem that the ISPs create elsewhere in the network. "When the FCC required reporting from AT&T after the company blocked Skype in 2009 and Google Voice in 2012, the disclosures revealed that AT&T was indeed misleading its customers. Today, countless Internet users are harmed by these ISPs’ ransom demands when these companies block innovation and blame others for the problem."

Free Press and other consumer advocacy groups want the FCC to reclassify Internet service providers as common carriers, which could provide greater regulatory authority over network interconnection agreements and paid prioritization deals that can speed up content over the network's last mile.

As a customer of both Verizon and Netflix I'd like to see the details of these agreements as well. I want to see where my subscription fees are going, especially the timing of any fee increases in relation to these agreements.

118 Reader Comments

As a customer of both Verizon and Netflix I'd like to see the details of these agreements as well. I want to see where my subscription fees are going, especially the timing of any fee increases in relation to these agreements.

As long as they don't gloss over the details and Wheeler doesn't say "Yeah, it's kosher because [half baked technobabble that doesn't make sense to those who understand technobabble]", this could be a very good development. I'm a Comcast subscriber with their 50Mbit plan, and it doesn't sit right knowing that Netflix is paying them a second time for what I'm already shelling out for.

Independent agencies of the United States federal government are those agencies that exist outside of the federal executive departments (those headed by a Cabinet secretary). More specifically, the term may be used to describe agencies that, while constitutionally part of the executive branch, are independent of presidential control, usually because the president's power to dismiss the agency head or a member is limited.

Huh. But what would revealing this information accomplish? Just venting public outrage while changing nothing, probably. It isn't even clear the FCC has authority over non-common carriers.

This is just Wheeler jogging in place over re-classification. Consumers can tell whether they are getting what they pay for the same way people can tell whether it's raining outside. When packet rates and latency won't tell you enough, Netflix has their graph series to fill in the gap.

But yeah, I want to dig into those mothers. I'm kinda disappointed we didn't see voluntary disclosure from Netflix, but we don't know the terms and I don't know how much interest there's been in the exact verbiage up to this point.

Accounting aside, Netflix is likely getting a better price per gigabyte now than they got from anywhere else.

This is probably true... for now. But it's absolutely not scalable; having to pay each individual ISP for a peering link will almost certainly cost more than paying Cogent and Akamai for all the bandwidth they need.

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

"Going on to work at the National Cable & Telecommunications Association from 1976 to 1984, Wheeler became president of the trade group in 1979. For a year until its closure, Wheeler was president of NABU Network, before spending a number of years creating or running several different technology startups. In 1992 he became the CEO of the Cellular Telecommunications & Internet Association, a post he held until 2004."

Industry insider and lobbyist. He is not our friend. He is, however the friend of all the companies he is supposed to be regulating. Hope and change indeed...

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

Consumers don't want the former, only because of the way ISP's want to define metered billing. They want to charge you a flat rate, and then apply metering as an overage.

I want a third party group like NIST to determine a fair price per GB of data (probably .01 - .10 or so) and standardize an easy to read standard meter for all households. And you don't pay if you don't use data, there is no basic charge. That means all the little old ladies or people that only use their connection for Facebook and e-mail, don't pay a minimum of $50/mo. That's what the ISP's don't want, actual fair pricing and metering treated identical to that of a utility.

Independent agencies of the United States federal government are those agencies that exist outside of the federal executive departments (those headed by a Cabinet secretary). More specifically, the term may be used to describe agencies that, while constitutionally part of the executive branch, are independent of presidential control, usually because the president's power to dismiss the agency head or a member is limited.

FOIA does not cover this type of information. Anything that could be considered a trade secret (which any pricing information definitely would be) is exempt.

Off course they do. I founded an ISP in 1994. The internet was built upon an Idealism where everyone involved knew connectivity was the key to success. That is why interconnect agreements, until relatively recently, were well managed and continued that foundation.

Now these bottom line companies want to destroy the very fabric of what has made the internet great. It is not like third parties are abusing Verizon, AT&T or Comcast for free transit across their network. Every single bit is destined for an isp's customer, an isp's customer who has already paid to receive this traffic.

There is zero chance the free market fixes this, so this is one of the few instances where we need the government to step in. I have little hope that they will step in and do the right thing though. Ultimately consumers are getting screwed and paying two different companies for the same service.

The bottom line is they are slowly tearing apart the foundation of the internet. The one where interconnecting with as many others was a primary goal as it is what allows the internet to remain strong and grow. If left up to the ISPs, we would have half a dozen AOL/Prodigy's take its place. The ideal solution is to have all the last mile pipe providers be spun off into their own companies. Verizon argues with Netflix while they try to promote and sell their Redbox Streaming Service. ISPs as content owners and providers must end.

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

Consumers don't want the former, only because of the way ISP's want to define metered billing. They want to charge you a flat rate, and then apply metering as an overage.

I want a third party group like NIST to determine a fair price per GB of data (probably .01 - .10 or so) and standardize an easy to read standard meter for all households. And you don't pay if you don't use data, there is no basic charge. That means all the little old ladies or people that only use their connection for Facebook and e-mail, don't pay a minimum of $50/mo. That's what the ISP's don't want, actual fair pricing and metering treated identical to that of a utility.

Utilities price this way as well. My electric company has a minimum of $75/mo no matter how much electricity I use. Same with water, same with gas. I don't know why people expect cable would be different.

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

Consumers don't want the former, only because of the way ISP's want to define metered billing. They want to charge you a flat rate, and then apply metering as an overage.

I want a third party group like NIST to determine a fair price per GB of data (probably .01 - .10 or so) and standardize an easy to read standard meter for all households. And you don't pay if you don't use data, there is no basic charge. That means all the little old ladies or people that only use their connection for Facebook and e-mail, don't pay a minimum of $50/mo. That's what the ISP's don't want, actual fair pricing and metering treated identical to that of a utility.

Utilities price this way as well. My electric company has a minimum of $75/mo no matter how much electricity I use. Same with water, same with gas. I don't know why people expect cable would be different.

How about because what you mentioned are finite physical resources, where cable and internet traffic are not...

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

Consumers don't want the former, only because of the way ISP's want to define metered billing. They want to charge you a flat rate, and then apply metering as an overage.

I want a third party group like NIST to determine a fair price per GB of data (probably .01 - .10 or so) and standardize an easy to read standard meter for all households. And you don't pay if you don't use data, there is no basic charge. That means all the little old ladies or people that only use their connection for Facebook and e-mail, don't pay a minimum of $50/mo. That's what the ISP's don't want, actual fair pricing and metering treated identical to that of a utility.

Utilities price this way as well. My electric company has a minimum of $75/mo no matter how much electricity I use. Same with water, same with gas. I don't know why people expect cable would be different.

Pretty sure all of those have a "we have it hooked up" fee and then charge per use. That's the honest way to do this kind of billing...

Also, $75 for electrical hookup is really high. Do you live in the middle of nowhere?

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

In fairness, the general reason consumers don't want the former is because it doesn't do anything to address the basic issue, which is bandwidth.

I only use 95-120GB per month, well under my cap, but I run into constant bandwidth bottlenecks because...well, my ISP can get away with it.

The other thing is that consumers just don't trust ISPs to meter fairly. First, there's the issue of metering accuracy (and yes, I know a sponsored study said "yes, the meters are A-OK!"...but I don't trust the study), and there's the issue of pricing accuracy. My current cost is around $0.10/GB (if I ran myself to cap every month), which already asininely high. On the other hand, if I were to break cap, I would pay $5/10GB, which is mind-bogglingly overpriced.

Off course they do. I founded an ISP in 1994. The internet was built upon an Idealism where everyone involved knew connectivity was the key to success. That is why interconnect agreements, until relatively recently, were well managed and continued that foundation.

Now these bottom line companies want to destroy the very fabric of what has made the internet great. It is not like third parties are abusing Verizon, AT&T or Comcast for free transit across their network. Every single bit is destined for an isp's customer, an isp's customer who has already paid to receive this traffic.

There is zero chance the free market fixes this, so this is one of the few instances where we need the government to step in. I have little hope that they will step in and do the right thing though. Ultimately consumers are getting screwed and paying two different companies for the same service.

The bottom line is they are slowly tearing apart the foundation of the internet. The one where interconnecting with as many others was a primary goal as it is what allows the internet to remain strong and grow. If left up to the ISPs, we would have half a dozen AOL/Prodigy's take its place. The ideal solution is to have all the last mile pipe providers be spun off into their own companies. Verizon argues with Netflix while they try to promote and sell their Redbox Streaming Service. ISPs as content owners and providers must end.

The ideal "free market" would fix this. But the incumbents act to avoid anything like a "free market". Notice what happens when some actual, honest-to-god competition comes into a market region.

The thing that slays me about all this is the blatant talking out of both sides of their faces that the ISP's are doing here.

"Upgrade to 50/10 service to get the best streaming video your TV can handle"

Meanwhile, they let the connection to specific networks degrade to the point where they're effectively useless during busy times (ie: every evening at 6pm).

All things being equal - if I have a 20mbit downstream connection, and network B somewhere else has sufficient capacity, I had best be able to download/stream from that network at some appreciably high percentage of my maximum DL speed, otherwise I'm simply not getting what I'm paying for.

That's what needs regulation. It's the equivalent of an electric company only giving me 12 volts to work with when I'm paying for 120v service. And quite simply, ANY company that wants an exclusive franchise agreement within a community should automatically be subject to such regulation. You want to be a monopoly? We'll treat you like one.

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

Consumers don't want the former, only because of the way ISP's want to define metered billing. They want to charge you a flat rate, and then apply metering as an overage.

I want a third party group like NIST to determine a fair price per GB of data (probably .01 - .10 or so) and standardize an easy to read standard meter for all households. And you don't pay if you don't use data, there is no basic charge. That means all the little old ladies or people that only use their connection for Facebook and e-mail, don't pay a minimum of $50/mo. That's what the ISP's don't want, actual fair pricing and metering treated identical to that of a utility.

Utilities price this way as well. My electric company has a minimum of $75/mo no matter how much electricity I use. Same with water, same with gas. I don't know why people expect cable would be different.

Pretty sure all of those have a "we have it hooked up" fee and then charge per use. That's the honest way to do this kind of billing...

Also, $75 for electrical hookup is really high. Do you live in the middle of nowhere?

No; I live in the middle of a corrupt big city (which is why I have very little hope that municipal broadband would be any better than Comcast). That's pretty typical to be honest; some places are higher and some are lower. The point is, nearly every utility company does what is called "two part pricing". They charge you a fee for access which usually includes a minimal level of usage, then a fee for what you use on top of that.

Even if someone doesn't use much bandwidth at all, there are costs involved with supporting them. Tech support, billing, line maintenance, capacity upgrades, etc. All of this must be done independently of how much bandwidth an individual person uses.

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

Consumers don't want the former, only because of the way ISP's want to define metered billing. They want to charge you a flat rate, and then apply metering as an overage.

I want a third party group like NIST to determine a fair price per GB of data (probably .01 - .10 or so) and standardize an easy to read standard meter for all households. And you don't pay if you don't use data, there is no basic charge. That means all the little old ladies or people that only use their connection for Facebook and e-mail, don't pay a minimum of $50/mo. That's what the ISP's don't want, actual fair pricing and metering treated identical to that of a utility.

Utilities price this way as well. My electric company has a minimum of $75/mo no matter how much electricity I use. Same with water, same with gas. I don't know why people expect cable would be different.

How about because what you mentioned are finite physical resources, where cable and internet traffic are not...

They are finite in the same way that electricity is: the power grid can only handle so much power, so they raise rates during peak hours to dissuade people from overloading the grid. The same logic could be applied to Internet usage. Upgrading an ISP's last-mile network is equally as complicated as adding power grid capacity.

When there's no appreciable difference between a 10/1 and a 50/10 connection when trying to watch streaming video (which is a justification ISPs use for increasing speed tiers to clients, and is directly related to ISP promotion and advertisement), at the end of the day, it's false advertising. Either ISPs need to switch to a modest and technologically sound metered system across the board (which would provide incentive for them to get you as much data as possible as quickly as possible), or they need to stop advertising that increased speed tiers will get you "more data at once" and "higher quality streaming video" across the board.

Unfortunately, consumers don't want the former, and ISPs aren't held to any kind of realistic standards on the latter, so it looks like we're stuck.

Consumers don't want the former, only because of the way ISP's want to define metered billing. They want to charge you a flat rate, and then apply metering as an overage.

I want a third party group like NIST to determine a fair price per GB of data (probably .01 - .10 or so) and standardize an easy to read standard meter for all households. And you don't pay if you don't use data, there is no basic charge. That means all the little old ladies or people that only use their connection for Facebook and e-mail, don't pay a minimum of $50/mo. That's what the ISP's don't want, actual fair pricing and metering treated identical to that of a utility.

Utilities price this way as well. My electric company has a minimum of $75/mo no matter how much electricity I use. Same with water, same with gas. I don't know why people expect cable would be different.

I guess it is because the minimum for cable is currently priced too high, for the crappy service they provide.I do favour a fair base price like 15-25 dollar, but the customer should get these 15-25$ dollars as credit and there should be a SLA like if you advertise "up to 50 MBit" you need to deliver at least 45 Mbit 95% of the time else the user gets discount, the crappier the service the exponentially higher the discount (up to 90%).

Independent agencies of the United States federal government are those agencies that exist outside of the federal executive departments (those headed by a Cabinet secretary). More specifically, the term may be used to describe agencies that, while constitutionally part of the executive branch, are independent of presidential control, usually because the president's power to dismiss the agency head or a member is limited.

A FOIA request doesn't necessarily mean you'll get a copy of the document.

Assuming the companies provided their contracts under seal, the companies have a legal right to contest a FOIA request for those contracts. It will take a court to make a final decision, but I believe such commercial agreements are indeed confidential and competitively sensitive.

An end-user has no more right to see those deals than a grocery shopper has a right to see the stocking contracts between the grocer and the baker who provides the bread for the grocer's shelves.

Wheeler says some tough-sounding things about this, but until we some some action on behalf of what the public is clearly pushing for, it's hard to take him seriously.

It took the EPA several years to get there regulations for CO2 emissions ready and that was with the backing of the Obama administration, which likely couldn't care less about broadband regulations. Commenters here seem to believe that a massive federal bureaucracy is able to draft, seek comments on, amend, vote on, and litigate new regulations the moment an idea pops into Wheeler's head.

As long as they don't gloss over the details and Wheeler doesn't say "Yeah, it's kosher because [half baked technobabble that doesn't make sense to those who understand technobabble]", this could be a very good development. I'm a Comcast subscriber with their 50Mbit plan, and it doesn't sit right knowing that Netflix is paying them a second time for what I'm already shelling out for.

It's worse because even with Netflix paying out, the quality hasn't improved.

Apparently (had to look it up) both Comcast and Verizon are doing extremely well financially already so maybe they should spend more of that profit to upgrade their networks and/or stop selling way more capacity than they have instead of blaming Netflix for providing a service that actually uses the bandwidth the customers are already paying for.